How is Roche Romania hedging the currency risk?

Local subsidiary of the Swiss-based healthcare company Hoffman la Roche posted solid quarterly sales this year, up 15% from prior year period. In spite of this advance, the company ended first year on the red.

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“The first two months were an extension of last year’s performance, the devaluation of the local currency being the main challenge we met. Starting with March, when the exchange rate was updated, things started to follow a more normal path, and overall the losses stood at 20% below last year”, Roche’s managing director Dan Zamonea (photo) told Wall-Street.

In order to transfer these losses to parent company, Roche Romania will start importing in lei. “In an effort to manage the currency risk, as of second half of 2009 or early 2010, we will start importing in lei, the risk being absorbed by the parent company”, Roche’s representative said.

Last year, the losses reported by Roche Romania topped 20 mln euro, equivalent to roughly 20% of the turnover recorded by the parent company last year.

Roche Romania had seen its cancer treatment segment hiking to a 25% share in total annual sales. “The sale of cancer medicines occupied a 25% portion and this year is expected to increase to 30%. However, we will still underperform the group by 10%”, the head of Roche Romania added.

As for Roche Romania’s total sales this year, Zamonea remains reserved. “Our expectations for this year are roughly modest. We forecast a 5-10% advance from 500 mln lei last year on a market assumed to rise by 5%” he estimated.

One of the main challenges ahead of the pharma industry will be the parallel imports resulted from the devaluation of national currency and frozen drug prices. “If the suppliers’ profit margin stood at 2-3%, it would be natural to shift focus to parallel imports. Even if they invested 55 for rewrapping, they would still have a 10% profit.

Another problem expected to muddy the waters will be the multiple patent expiries. “In 2010 and 2011 we will have to deal with loads of patent expiries, which can be translated into a sharp contraction of the turnover. In these conditions, the companies have new molecules in pipeline or they buy other molecules together with the producer”, said the head of Roche.

In these conditions, “With these mergers, such as Zentiva with Sanofi, Pfizer with Wyeth or Merk with Shering-Plough, the companies target a stability in the molecule industry, as well as staff and production cost reduction”, he explained.

Roche targets 50 mln euros from the sale of cancer drugs

The local subsidiary of the Swiss drug maker Hoffmann la Roche said it expected the share of cancer drugs in total sales to increase to 50 million euros this year.

Last year, the cancer drug segment accounted for 35% in the group’s turnover, and in the first five months it was the main growth driver of the drug maker’s total sales. “Cancer drugs recorded the biggest growth pace of all products ranges in our portfolio, of nearly 60%, the best sold drug being MabThera, followed by Herceptin and Avastin”, said Dan Zamonea (photo) , managing director of Roche Romania. As he noted, the Romanian subsidiary outperformed the market by...